OfflineHi Everyone:
I found this deal, but not sure what to do with it.
I found a foreclosed house for sale in So. CA for $850K, which sounds like a lot. It's really a tear-down, but here is the deal:
Lender owned, approved tentative tract map, so I just have to pull permits and start building this 18 unit townhome project. Projected sales price comparables at $463k or $309.47 per sq.ft. 18 units x $450K = $8,100,000 projected gross income. Estimated time for completion = 18 months. Contractor's bid in place to build project for $2.8M. Looks like a profitable project, and for the $850K, you get the tear-down house, plus plans, tests and reports.
Now, Miss Anita was super-kind and generous and posted a hard money lender she likes about a week ago.
I don't know if a hard money lender is going to give me the $850K plus $2.8M for contractors for a loan that needs a life of at least 18 months until completion of the project. The bank/owner also wants 2 months for a closing of escrow.
Is this waaay too much for little ol' me? Or is this a real opp to make over $4M in less than 2 years?
Is there another deal in here? The bank won't go for any "and/or assigns".
Thanks for your help!
Jenny
Have you tried contacting a coach for advise; I don't know if you're signed up with Success Academy? I don't want be the one give you any bad advise. Have you look at the possibility of commercial loan to finance this project & purchase the property?
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Hello,
Cali is without a doubt, One of the %$*&^$ states in the union. What you say sounds good as for as an investment(Due paper work for zoning)! Two years before (For Sale) I can see the OPP.You say HML which can work,Remember there is that (Old money too)long money!
Invest in yourself!
While I am new to REI, I do have some experience in online marketing. I would contact my chamber of commerce and locate groups who have some money to invest.. ie Doctors and Lawyers. Alot of people are taking their money out of the stock market and they need some where to put their money. I have also put ads in business publications looking for joint venture partners.
I do not want to believe this deal is to big for you. I would love to see you succeed. I am looking foward to hearing your success story.
I've talked to some private money people and even they want you to put some of your own money down before they will. I know that if this deal is what you really want then go for it! Know your facts first Dean has given us the power to succeed. Just do it!!!!
grannyl
Folks, thanks for your suggestions! GrannyL is right that everyone wants you to have some of your own skin in the game. The problem with using a hard money lender (HML) in this situation is that you have to make interest only payments during the course of the loan before it becomes due. Interest on $850K plus whatever money I could get to start the construction bid of $2.8M is a big chunk of change.
Rosefield and Successpig had some great ideas re pooling investors together. Frankly, I don't know if I have the stomach to go through 18 months of construction. Of course, I'd get new construction bids. Also, I think a price per foot of over $300 per sq.ft. sounds really high.
Anyhow, keep them trains rolling and anyone with more thoughts, please feel free to let me know!
Thanks for your help, Everyone!
JennyInMalibu
Secure the deal, if you can finance it on your own than turn around a advertise property to commercial builders to make money off deal. Or keep the land right and let a commercial investor build the apt complex and you work out a equit split with the builder. I'm trying to say is find someone to partner with on this deal who has the experience of building small and/or medium community complexes. Before somebody else get's it.
Rosefield and Successpig had some great ideas re pooling investors together. Frankly, I don't know if I have the stomach to go through 18 months of construction. Of course, I'd get new construction bids. Also, I think a price per foot of over $300 per sq.ft. sounds really high.
Anyhow, keep them trains rolling and anyone with more thoughts, please feel free to let me know!
Thanks for your help, Everyone!
JennyInMalibu
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Hi Alana:
you're right. Somehow I've got to rope the property up (bank won't take a "and/or assigns"). I've got to find a buyer or an investor with construction experience.
Now, if any Deanies out there think they have some buyers that would be interested in this property, I will split the "finder's fee" equally with you if the buyer you give me goes through with just the REO purchase.
Remember, the buyer doesn't have to be the end; the buyer could then flip this to some commercial investors.
Thanks!